Leela Hotels IPO Listing: Stock Lists at 6% Discount to Issue Price

Leela Hotels IPO Makes Weak Debut, Lists at Over 6% Discount Despite Strong Demand

Schloss Bangalore Limited, the company behind the iconic Leela Hotels & Resorts brand, made a disappointing entry into the Indian stock market on June 2, 2025.

Despite healthy subscription figures during the initial public offering (IPO), the stock listed at a notable discount to its issue price, leaving investors and market watchers underwhelmed.

Listing Details: Shares Fall Short on Debut

Shares of Schloss Bangalore Limited were listed on the Bombay Stock Exchange (BSE) at ₹406.50 per share, representing a 6.55% drop from the IPO issue price of ₹435. On the National Stock Exchange (NSE), the stock debuted even lower at ₹406, down 6.67%.

This lukewarm debut came despite the IPO being subscribed 4.72 times, indicating robust demand, especially from institutional investors. Prior to the public issue, the company had raised ₹1,575 crore through its anchor book on May 23.

The IPO, which ran from May 26 to May 28, was among the largest hospitality sector listings in recent years, with a total size of ₹3,500 crore.

Of this, ₹2,500 crore was raised through a fresh issue of shares, and the remaining ₹1,000 crore came from an Offer for Sale (OFS) by one of its key promoters, Project Ballet Bangalore Holdings (DIFC).

Company Overview: The Legacy of Leela

Founded in 1986 by Captain C. P. Krishnan Nair, the Leela Hotels brand quickly established itself as a symbol of luxury, elegance, and Indian hospitality.

Named after his wife Leela, Captain Nair’s vision gave birth to iconic properties such as The Leela Palace in New Delhi, Bengaluru, and Udaipur.

However, financial troubles plagued the group in the late 2010s. In October 2019, a significant shift occurred when the Leela Group sold its hotel operations and properties to Brookfield Asset Management, a Canada-based global investment firm.

The deal, worth ₹3,950 crore, marked Brookfield’s formal entry into India’s hospitality space.

Today, Leela Hotels is operated by Schloss Bangalore Limited, a Brookfield-backed entity. The company currently manages 13 luxury hotels across India, with a total inventory of 3,553 rooms, making it one of the prominent players in the country’s upscale hospitality market.

Financial Performance: Revenue Growth Amid Debt Concerns

For the financial year FY 2024–25, Schloss Bangalore reported a 15% year-on-year increase in revenue, reaching ₹1,406.56 crore, up from ₹1,226.50 crore the previous year.

Net profit stood at ₹47.66 crore, signaling a return to profitability. However, the company is still burdened by a substantial debt of ₹3,908.75 crore, as of March 2025.

The fresh capital raised via the IPO is intended to improve the company’s financial health. Specifically, the funds will be used to:

• Repay or prepay debt of the company and its subsidiaries, including Schloss Udaipur, Schloss Chennai, Schloss Chanakya, and TPRPL
• Support general corporate purposes

This deleveraging move is critical, as reducing debt will improve margins and allow greater flexibility for capital expenditure, operational upgrades, and expansion plans.

Market Sentiment: Analysts Recommend Long-Term Patience

Market analysts had tempered expectations for Leela Hotels’ listing performance well ahead of the debut.

While the brand is respected and the long-term outlook for luxury hospitality remains strong, near-term headwinds such as high valuation, global macroeconomic uncertainty, and sector cyclicality contributed to investor caution.

Mahesh M Ojha, AVP – Research & Business Development at Hansex Securities, commented:

“This listing was never expected to deliver massive short-term gains. The company has a valuable brand, but faces significant debt challenges. Short-term investors should manage expectations. Long-term investors, however, may find value if the company continues to improve margins and operational efficiency.”

Mehta Equities had also predicted a subdued debut. The brokerage remains optimistic about the long-term prospects of the brand, citing structural growth in the Indian hospitality sector:

“The Leela Hotels brand stands to benefit from rising domestic and international travel, expanding business hubs, and premium destination weddings. Investors allotted shares can hold with a long-term view, while new investors may wait for post-listing corrections to enter at more favorable valuations.”

Promoter and Shareholding Structure

Schloss Bangalore Limited is part of Brookfield’s India-focused infrastructure and real estate investment platform.

The company’s ownership and promoter group include several entities registered in the Dubai International Financial Centre (DIFC):

• Project Ballet Bangalore Holdings (DIFC)
• BSREP III Joy (Two) Holdings (DIFC)
• BSREP III Tadoba Holdings (DIFC)
• Project Ballet Chennai, Udaipur, Gandhinagar, and HMA Holdings (DIFC)

These entities are instrumental in Brookfield’s strategic expansion into Indian hospitality and infrastructure. Their continued backing provides a measure of stability and operational credibility.

Industry Outlook: Indian Hospitality Sector Poised for Growth

India’s luxury hospitality segment is projected to grow at a CAGR of 9-10% over the next five years, driven by a resurgence in tourism, rising disposable income, and greater demand for high-end experiences.

Government initiatives, such as infrastructure development and tourism promotion under “Incredible India,” further bolster sectoral growth.

Leela Hotels, with its established brand and international support from Brookfield, is well-positioned to tap into this demand.

However, profitability and sustained growth will depend on prudent financial management, brand consistency, and expansion into newer high-potential markets.

Investor Outlook: Should You Buy, Hold, or Exit?

Given the underwhelming listing, many investors are wondering whether to hold or exit. Here’s a breakdown:

• For existing shareholders: Hold the stock if you believe in the long-term growth of India’s hospitality sector. The brand has resilience, and deleveraging could unlock further value.
• For short-term traders: The stock may remain range-bound or face minor corrections. This isn’t an ideal pick for short-term gains.
• For new investors: Consider entering after further market correction, once the stock stabilizes and financial metrics show improvement.

Final Thoughts

The IPO of Schloss Bangalore Limited may not have had the dream debut investors hoped for, but the long-term story remains intact.

Leela Hotels continues to be one of India’s most prestigious luxury hospitality brands, and with strong backing from Brookfield and a focused use of IPO proceeds, the path to recovery and growth is clear—though not without challenges.

As with many investments, patience and a long-term view may ultimately reward shareholders who stay the course.